Merger talks confirmed

Tesla and SpaceX have formed special committees of independent board members to explore a possible merger, Elon Musk told investors during SpaceX's third-quarter earnings call Tuesday.

Musk excluded from talks

Musk cannot participate in the special committee discussions because he is a conflicted party, owning roughly twenty percent of Tesla and forty-five percent of SpaceX.

“This is definitely the kind of question where I feel like I'm tap dancing through a minefield.”

Market reaction

Tesla stock rose just over one percent in after-hours trading, while SpaceX rose above five percent following the earnings call with Wall Street analysts.

No deal yet

The committees have not reached any agreement on merger terms, and there is no guarantee they will. Musk cautioned against assuming a merger is certain.

“some people out there assume that a SpaceX and Tesla merger is a certainty, and I think that would be overstating it.”

Potential synergies

Musk cited collaboration opportunities in AI software, chip design, robotics, and connectivity, plus the planned Terafab chip plant being developed jointly by both companies.

Valuation and hurdles

At Tuesday's closing prices, a combined Tesla-SpaceX would be worth about three point five trillion dollars, with SpaceX at about two trillion and Tesla at nearly one point five trillion.

SpaceX reports strong earnings

SpaceX reported its first operating profit since its June IPO, with third-quarter revenues rising one hundred sixty-one percent to fourteen point fifty-eight billion dollars, and net income of four point four billion dollars.